These companies are poised to gain from a more stable health care market anticipated in 2026, and there might be opportunities to invest at lower prices now.
Interestingly, it feels like almost every sector is struggling right now, except for artificial intelligence (AI). The health insurance sector had perhaps its most turbulent year in 2025, largely due to unforeseen rises in medical costs that eroded profitability.
This shift resulted in a decline in the valuation of medical insurance stocks. For instance, the large medical provider UnitedHealth Group (UNH +3.10%) has witnessed a drop of 53.6% from its peak. Meanwhile, technology-driven Oscar Health (OSCR 2.23%) has seen its shares plummet over 60%. This scenario could present a buying opportunity, as analysts expect profits to rebound by 2026.
So, why might these two stocks be among the best choices for a $1,000 investment this February?
Oscar Health: A Disruptor in Insurance
Oscar Health is making waves in the health insurance space, aiming to simplify insurance for private payers while focusing on the Affordable Care Act (ACA) market. The company has carved out a niche in the individual health insurance landscape, leveraging technology, competitive pricing, and customer satisfaction.
As of February, Oscar Health had around 3.4 million members insured, a substantial increase from just 400,000 shares in 2020. So, why are they facing falling stock prices? There’s concern about the impending expiration of subsidies for low-income individuals in the ACA market come the end of 2025. This uncertainty could affect Oscar’s paying customers in 2026. Moreover, the company’s healthcare costs surged more than expected in 2025, leading to losses.
This combination of factors has had a negative impact on Oscar’s stock value. Still, 2026 appears to be a turnaround year. With price hikes and improved customer retention reported, Oscar Health predicts its revenue could jump from $11.7 billion in 2025 to as high as $19 billion in 2026, generating an operating income between $250 million and $450 million. For a company with a market cap of just $3.6 billion and a record of robust growth, this price might seem appealing right now.
UnitedHealth Group: Ready for a Comeback
UnitedHealth Group also faces challenges ahead in 2025, including those previously mentioned, which could dampen its earnings. On top of that, the company has dealt with cybersecurity breaches, allegations of inflated health insurance claims for Medicare patients, and an antitrust lawsuit.
Despite these hurdles, health insurance remains a necessary part of the private healthcare system. In 2026, UnitedHealth anticipates generating $439 billion in revenue, with approximately $24 billion in operating income resulting from changes in customer premium pricing.
Currently, the company’s market cap sits at around $260 billion, translating to slightly over 10 times its operating profit estimates. Given the trends of rising medical inflation and an aging U.S. population, even long-established insurers like UnitedHealth are positioned for steady growth in the coming years. Investing now at a price-to-earnings ratio of just 10 might just be a savvy move for the future.
